The state government is contemplating to take over the land allotted to the Hinduja National Power Corporation Limited (HNPCL) in view of the company flouting the agreement and considerable delay in the grounding of the mega power project. The high-level government panel, probing the alleged irregularities in HNPCL in Visakhapatnam, is likely to submit its report to the government by the end of the month, instead of April 23.

Sources say that the panel is laying emphasis on the benefits accruing to the state in the allotment of about 1,123 acres of “valuable land” in Visakhapatnam to HNPCL and weighing the options before the government to resume the land allotted to HNPCL, since it failed to comply with the conditions of the contract. The project, which is dragging its feet and is years behind schedule, came under fire from the Comptroller and Auditor General and Public Accounts Committee (PAC).

HNPCL blamed the government for the delay. The power project is caught in multiple issues, including delay in grounding of the project, alienation of Wakf property, multiple extensions, revision of Power Purchase Agreement, sale of Wakf land at a throwaway price, among others.

The government, upon the directions of the PAC, set up a high-level committee, headed by special chief secretary, chief commissioner of land administration (CCLA) and senior officials from the departments of energy, revenue, minorities welfare, law and Wakf Board. “The committee sought an extension of a week, from April 23, for submission of a comprehensive report,” the principal revenue secretary said.

The state government entered into an agreement with HNPCL on April 15, 1998, allotting about 1,123 acres of land in Devada village in Visakhapatnam district to HNPCL for setting up a 1,084 MW coal-based thermal power plant. The agreement stipulated that financial closure of the project should be achieved within 12 months from the date of agreement and the power project should be completed within 44 months from the date of financial closure.

The project is yet to take off. As per the legal advice obtained by the government in June 2005, there was gross breach of contract by HNPCL since it had not paid the cost of land in full to the government and also not fulfilled the condition of financial closure within in the stipulated time, thus rendering the agreement invalid. However, the government ignored the advice. In February 2004, the High Court decreed that the title of the land, allotted to HNPCL, belonged to the Wakf Board, However, four years later, in March 2008, the government dire-cted the Wakf Board to sell the land to the HNPCL, at the rates prevailing in 1999, for Rs 47.55 crore as against the market value of Rs 224.47 crore.

The committee will probe whether the government has the power to direct the Wakf Board to sell the land. On September 1, 2010 HNPCL offered to surrender about 500 acres of unutilised land to the Wakf Board, but it was rejected. Aptransco informed the PAC in February this year that as per the initial agreement, 100 per cent power generated by HNPCL was to be given to the state. But the agreement lapsed in 2001 and as per the new agreement signed in the year 2007, only 25 per cent of the power generated will be given to the state at the rates offered by NTPC Simhadri Extension Project State II.